What Lies In Store for the Global Economy In 2016

What Lies In Store for the Global Economy In 2016

Every New Year brings with it various economic events which tend to catch people by surprise. No matter how carefully you consider the data presented, it is not always possible to make an accurate prediction. For example, there weren’t many people who foresaw the slump in oil prices that began in the 2014 summer. Neither were they able to predict the sharp fall of the Chinese economic growth.

 

However, there are still other events that you can make a reasonable prediction based on careful consideration of economic data. As such, here are a few economic trends that might come to the fore in 2016 and thereby shape global economy.

 

The State of the Chinese Economy

For the last few years, China kept stunning the world with its economic growth rates. Sometimes, they were three times more than what the United States enjoyed. Of course, the capital investment directed by the government had a major role to play in this matter. When the global financial crisis stuck, China remained more or less unfazed thanks to the huge boost provided by the government

Unfortunately, most of this investment was made possible by growing the debt instead of profits. Now, China will have to shift the wealth from the powerful to the common Chinese household. Suffice to say, that will neither be politically easy nor fast. This trend is likely to be a recurring theme in 2016 and more.

 

The American Economy will affect the Global Economy

It may come as a surprise to many but it is a fact that the performance of the US economy is currently the best in its class. After all, the rest of the developed world is experiencing a slower growth compared to America, especially with the decline that China is experiencing.

More importantly, the largest trade deficit in the world currently belongs to the United States. In other words, the other major economies in the world such as China, Japan and Germany are depending on the demand in the United States in order for their economies to experience growth. This situation is likely to continue through 2016 where the global economy leans on the consumer in America.

 

The Indian Economy Can Experience Major Growth

The International Monetary Fund believes that the Indian economy is poised to grow at a rate of 7.3% in 2016. That will be faster than even what the Chinese can muster up with the inflated numbers produced by its government. It is likely that 2016 will become a turning point. India may not be as technologically advanced as China but it may turn out to become the fastest growing economic in the large sector.

India has also been affected by the same issues that have slowed down economies in other emerging markets. However, demographics have proven to be India’s advantage. In the coming decade, the Indian workforce may grow up to be bigger than even the Chinese.

 

Of course, nothing can be said to be certain about the future of the global economy. Europe might end up on the edge of an economic crisis, for example. One can only hope for the best.

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